RBI Fines Manappuram Finance Rs.20 Lakh for KYC Violations
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹20 lakh on Manappuram Finance Limited for failing to comply with certain provisions of the RBI’s Know Your Customer (KYC) Directions, 2016. The penalty was announced in an order dated December 16, 2024, and enforced under the powers granted by the Reserve Bank of India Act, 1934.
RBI’s Inspection and Findings
The RBI conducted a statutory inspection of Manappuram Finance based on its financial position as of March 31, 2023. During this inspection, the central bank identified instances of non-compliance with KYC norms. Following the findings, the RBI issued a show-cause notice to the company, asking why a penalty should not be levied for these violations.
After reviewing the company’s response and considering oral submissions made during a personal hearing, the RBI concluded that the following violations had occurred:
- Failure to Verify PAN: The company did not verify customers’ Permanent Account Numbers (PAN) using the issuing authority’s verification facility at the time of onboarding.
- Duplicate Customer Codes: The company assigned multiple identification codes to some customers instead of providing each customer with a unique identification code, as mandated.
RBI’s Statement on the Penalty
The RBI clarified that the penalty was imposed due to regulatory lapses and not as a judgment on the validity of any transactions or agreements entered into by Manappuram Finance. The central bank further noted that this action does not preclude the possibility of additional measures being taken against the company.
Background
Manappuram Finance is a leading non-banking financial company (NBFC) specializing in gold loans and other financial services. Compliance with KYC norms is critical for financial institutions to prevent fraud, money laundering, and other financial crimes.
The RBI’s decision underscores the importance of adhering to regulatory guidelines and maintaining robust compliance mechanisms.
